Goldman Sachs' Relative Strength Line At New High

When a stock gets hammered big time, some investors like to see three waves down before they trust the troubles are over.

Investment banker Goldman Sachs (GS) has taken three gut punches. Although the monthly chart shows that the retreats haven't involved lower lows, the sell-offs were sharp enough to test even the strongest holders.

From October 2007 to November 2008, Goldman's stock lost 81% of its value.

From October 2009 to July 2010, the stock sank 33% off its most-recent high.

From January 2011 to October 2011, Goldman slid 52% off its most-recent high.

Considering how hard financials were hit by the recession and the regulatory uncertainty that followed, Goldman's struggles weren't surprising.

The five-year Earnings Stability Factor is 69 on a scale that runs from 0 (calm) to 99 (wild). The three-year Earnings Stability Factor improved to 32.

Circumstances generally are improving for Goldman's Bank-Money Centers industry group. As of Monday's IBD, the group was No. 19 among 197 groups in six-month price performance.

In the past two quarters, Goldman's revenue growth jumped 82% and 39% vs. the year-ago periods. Earnings grew to $2.85 a share in Q3 vs. a year-ago loss and to $5.60 a share in Q4, up 204% vs. the year-ago quarter. After-tax margin was 26% in Q4, the best in 12 quarters.

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